Neeraj of the ideas-innovation blog and I seem to be coming to the same conclusion -- this is an exciting and vocal time in terms how individuals are seen to interact with innovation.
We're in good company. As Neeraj notes "I feel there is a similarity between the Idea proposed by Seth Godin of people joining Tribes/communities for a meaning & being relevant & in Tim Brown's Idea of Consumers becoming participants."
I agree.

IdeasProject has a great interview with Tim Brown focused on our shifting roles as users, participants, and consumers. He notes that communication technology enables increased participation in how we interact with service providers and takes us back to an earlier age when people were more active participants in their society. He goes on to speak of all of our need for design thinking (video version below):

I do believe this idea of participation changes design fundamentally and has to change design fundamentally. On one level, you could argue that we all have to become design thinkers. It's one of those social skills that we all need, that we all have to be able to figure out how to solve problems creatively and to participate, in order to be able to participate. That's one place you can put it. You can say, 'Okay, we need to start teaching design thinking to everybody.' In this world, I don't think design ever gets finished. Things continue to evolve and morph and change. We have to get used to this idea that design becomes more of an enabling thing that goes on over a long period, rather than something that gets done, finished, and handed over.

Design thinking, paraphrasing from a 2008 post to Tim's blog, is matching our needs with what is technologically feasible, perhaps with a focus on business strategy, customer value, and market opportunity. There, I think he was offering a formal designer's perspective -- designing for a market. Now he may be broadening the ideas to consider both formal designers and consumers of design -- with the idea that design is never finished and is enacted by users/stakeholders.

There is a great deal of traction around these ideas. I've contributed All of Us as Accidental Systems Designers, and Systems Savvy: Do You Have It? (as well as prior comments on IDEO and design thinking). Seth Godin talks about change being the results of tribal action, not the action of a "king." Many people now even do their sensemaking in public: Consider the number of blog entries around the value and forms of use for Twitter, Facebook, and the like. I focus on organizational issues as systems savvy (my term for the ability to grasp the capabilities of a technology and how technology and organizational practice might be interwoven in new ways) has a great deal of leverage there.

Systems savvy is critical to modern organizational function given the complexity and reach of organizational systems. I also think there is special opportunity in organizations. In organizations we are are more likely to formally think about practice than, I suspect, in our individual lives. Our organizations have increasingly sophisticated work systems built up from meshed organizational practices and technology tools. These systems are constantly in flux due to the needs of innovation and the pressures of economics.

We can either let these systems evolve, or we can practice design -- all of us can practice design, not just change agents. Stakeholders are no longer mere recipients of work system change except as recipients of vision. Instead, stakeholders are active participants though their own sensemaking (the understanding they have of the work system and the possible options for the work system’s use) and active participation in the design of the system. Thus our need for systems savvy, design thinking, and more proactive participation in our how we get work done.

Tim Brown describes these roles and needs as they relate to the power of communication technologies. I'll push it a bit further and claim that our reliance on software systems, rather than physical ones, gives us greater opportunity to participate in design and change throughout the organization. Henry Ford's workers were unlikely to be able to re-engineer their assembly-lines. Many of us, however, can easily participate in the design of our workflows.

In growing numbers, corporate sponsors are embracing the prize challenge as a safe, inexpensive way to farm out product research, at a time when tight credit and business cutbacks have slowed innovation. Venture-capital investments have dropped by almost half since last year, reaching the lowest level since 1997, the National Venture Capital Association recently reported. "Here is a mechanism for off-balance-sheet risk-taking," says Peter Diamandis, founder of the X Prize Foundation. "A corporation can put up a prize that is bold and audacious with very little downside. You only pay the winner. It is a fixed-price innovation."

Prizes can be specific outcomes (like a method for finding longitude at sea after a six week voyage) or more general. Cisco has used their i-Prize to uncover new business ideas. However, they built that prize based on their internal success with the I-Zone,

Cisco's internal innovation Wiki.... Any one of Cisco's 65,000 employees can post business ideas, work collaboratively with other Cisco employees to develop an idea, and, if lucky, be a part of launching a new business. I-Zone was working so well, Cisco wanted to open the concept to the public. "Why not at least give it a try, we thought," Jouret says.

Prizes, like other management actions, fit in a system. Motivation to take part will exist to the extent that the prize offered has value to the participants (either extrinsic or intrinsic), to the extent that the participants believe that success is possible, and to the extent that participants trust that the prize will be awarded. This is basic motivation theory (expectancy theory -- Vroom).

Perhaps the belief that success is possible is the key to using prizes for innovation -- especially internal innovation prizes. By highlighting an issue you're signaling that at least someone thinks this is possible (though some unsolved math problems have stood for over 100 years). You are also signaling organizational support for effort spent on the project. This may reduce perceived barriers: employees may see that the organization is serious about innovation, serious about innovation on the particular topic, and that there is some roadmap for using the innovative ideas.

Hotz and McKinsey have done a wonderful job on the external prizes. What can we contribute to the understanding around internal prizes? What has worked or not worked in your organization? Have you participated in internal innovation competitions? Links especially appreciated.